The Hindu Business Line : The agriculture-rural paradox

If farming is to be reasonably remunerative in future, a great deal depends on moving people away from farms, to ensure viability of holdings. That calls for creating more non-farm jobs in the countryside and further de-linking rural livelihoods from agriculture, says HARISH DAMODARAN.

“India lives in its villages” is a motherhood statement, just as much as the corollary maxim that treats Indian culture as synonymous with agriculture. It is, therefore, natural that policymakers are chided for their apparent ignorance of rural realities and politicians deplored for remembering farmers only at the time of elections.

Reinforcing this perception has been agriculture’s declining contribution to the country’s GDP — from over 48 per cent in 1950-51 to below 17 per cent in 2006-07 — in the face of a markedly lower fall in the share of the rural population over this period (from 83 per cent to 75 per cent). Redressing the widening imbalance between ‘Bharat’ and ‘India’ is seen as a major challenge, both from an equity as well as sustainable growth perspective.

Legitimate, no doubt, as these concerns are, they do not adequately capture some of the finer nuances of what precisely constitutes ‘rural’ and how much of rural India is really agricultural. The extant framework also views the ‘farmer’ or the ‘farming household’ as static entities in an isolated, unchanging village context, sans much interaction with the ‘outside’ (urban) economy and society.

To start with, consider what exactly ‘rural’ entails. According to the Chief Statistician of India, Dr Pronab Sen, ‘rural’ has only a residual definition; any area that is not urban is termed rural. Now, what is ‘urban’?

What is rural?

In the 2001 Census, urban covered “all statutory places with a municipality, corporation, cantonment board or notified town area committee, etc” and any place having “i) a minimum population of 5,000; ii) at least 75 per cent of male working population engaged in non-agricultural pursuits; and iii) a density of population of at least 400 per sq. km”. All areas outside this definition are deemed as ‘rural’.

It is by this rather loose definition that rural areas account for almost 74 per cent of all households in India and 76 per cent of its population, according to the National Sample Survey Organisation’s (NSSO) Employment and Unemployment Situation for 2005-06 (Report No. 522).

And given the traditional association of rural with agriculture, it is presumed that the countryside folk — barring the odd village artisan or greengrocer — are primarily engaged in farming. From this also follows the grim conclusion that three-fourths of India today generates less than a fifth of its income — which is doomed to shrink even more.

However, things aren’t as gloomy as that. The same NSSO survey report also shows that, of the 74 per cent households that are rural, 34 per cent comprise those ‘self-employed in agriculture’.

These refer to households drawing 50 per cent or more of total income from operating their own farm enterprise during the year.

Besides the 34 per cent, another 25.4 per cent households represent ‘agricultural labour’ that receive at least half of their income by working for wages in others’ farms.

In other words, within the 74 per cent rural households, only 59.4 per cent (i.e. 44 per cent of all households) are involved in agriculture, either as farmers or as farm labourers.

The remaining 40 per cent-plus rely on non-agricultural activities as their major source of income.

Clearer picture

But even these numbers do not convey the true extent of Bharat’s dependence on agriculture. A better picture emerges from an earlier NSSO survey on Income, Expenditure and Productive Assets of Farmer Households for 2003 (Report No. 497).

As per this, six in every 10 households in rural India belong to farmers. What is striking, though, is the definition of ‘farmer household’ — one having “at least one farmer as its member”. Thus, even if other members are army jawans, schoolteachers or drivers remitting money from outside, the ‘farmer household’ identity still holds!

The above ambiguity is reflected in the last column of the Table, which shows how much of farmer household incomes originate from farming per se.

The all-India average comes to slightly above 50 per cent. In Rajasthan, where 76 per cent of rural households supposedly are of farmers, the figure is less than a quarter. Kerala is 77 per cent rural but, of this, farmer households constitute barely 44 per cent and they, in turn, derive not even a third of income from agriculture.

There are no comparative statistics for landless farm workers, but from common observation it is obvious that agriculture (even in irrigated areas growing two crops a year) does not give employment scope for all 365 days. The labourer who harvests wheat in the villages of Punjab during April-May and transplants paddy in June-July would typically be pulling rickshaws, if not working in some Ludhiana hosiery or foundry sweatshop, for the remaining months.

On the whole, if one takes the 60 per cent of the 74 per cent rural households that are officially agricultural and assume half their earnings to actually originate from farms, the latter’s share in the income of all Indian households works out to roughly 20 per cent. This more or less tallies with the estimated contribution of agriculture to the country’s GDP.

Locating agriculture

So, does it imply the farm sector is not all that important? Well, that’s not what is being said. The 20 per cent represents the sector’s direct contribution to the economy. It includes the value of sugarcane, cotton and oilseeds produced in the fields, but not the value added to these in the form of sugar, alcohol, textiles and vegetable oils in factories.

Moreover, farmers also purchase fertilisers, pesticides, tractors and a host of other inputs and consumer goods. If the indirect forward and backward linkages are accounted for, agriculture’s share in GDP would probably go up to a third or more.

The point made here pertains not to agriculture’s overall significance to the economy, but to its rather exaggerated role in providing livelihoods in today’s context. With the growing fragmentation of holdings, farming is fast becoming an unviable standalone occupation capable of supporting entire households. Further, the spurt in construction and other urbanisation-induced economic activities has enhanced migration options for rural labour, which is no longer cheap and pliable like before.

As the sociologist, Prof Dipankar Gupta has pithily noted in a recent article (“The Changing Villager”, Seminar, September 2008), the heydays of landlords who once killed, raped and looted at will in villages are over and “their descendents have no such luck”!

The irony is that if farming were to be reasonably remunerative in future, a great deal depends on moving people away from farms so as to ensure minimum viability of holdings (not to be confused with moving land away from agriculture, as some believe the present special economic zones policy is encouraging).

And that calls for creating more non-farm jobs in the countryside and further de-linking rural livelihoods from agriculture.

In the unfolding slowdown scenario, the worst case is that of the migrant rural labourer who was polishing diamonds in Surat or bleaching knitted fabric in Tirupur — and now having to undertake distress reverse migration back to the farm.